Quote of the week: 

“In investing, what is comfortable is rarely profitable.” Robert Arnott

An optimist’s view on AI

Following up on his much-discussed essay (Why AI Will Save the World) the venture capitalist Marc Andreessen spoke with Ben Thompson this week and had an open dialogue about the future of artificial intelligence—podcast here and transcript here. The dialogue is a thought-provoking conversation about software, business histories (including Amazon and Tesla), and, of course AI. 

A couple of weeks ago, I highlighted how much of the media conversation around AI has largely been hijacked by extreme viewpoints. In contrast, I found this dialogue to be a fairly balanced—but ultimately optimistic perspective—on where AI will take us, and how it will improve our lives.  “I don’t expect miracles, I expect basically small tangible steps, and I expect small tangible steps that basically take you forward in good ways,” Andreessen says. “Look, I’ve been dealing with this, the minute we launched the web browser, people were like, ‘What about cyber crime? What about hacking?’ … You know what? That all happened. There’s still ransomware attacks happening over the Internet today. All that stuff is still happening and whatever other things people don’t like about the Internet, it’s all happening. Yet at the same time, I think it’s just very clear if you did a societal accounting, it’s been a gigantic advance.” He continues:

“Had we applied the precautionary principle or any of the current trendy epistemic methods to evaluating the introduction of prior technologies ranging from fire and the wheel all the way to gunpowder and microchips, we would not be living in the world we’re living in today. We’d be living in a much worse world, and child mortality would be through the roof and we’d all be working these god awful physical labor jobs and we’d be like, ‘Wow, is this the best we can do?’ I think our species has actually an excellent track record at dealing with these things, and I think we should do what we do, we should build these things and then we should figure out the pros and cons.”

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A deep-dive on the energy grid

Brian Potter of Construction Physics is one of my favorite analysts on the energy transition beat, and his latest piece—The Hard and Soft Paths of Energy Strategy—is a good example of why. Potter takes a highly complex subject, the evolution of electric grids and global power supply, and breaks it down for the lay reader. “Modern civilization would be impossible to operate without cheap, widely available electric power,” Potter writes. “The grid makes modern society possible. But today, the grid faces several challenges that threaten its ability to distribute electric power.” He continues:

“They are increasing use of variable sources of electricity, decreasing grid reliability, increasing delay in building electrical infrastructure, and increasing demand for electricity. Addressing these challenges will require massively rebuilding our electrical infrastructure. How we choose to do this will shape the future of the grid. For most of its history, electric power generation worked like any other machine—it was turned on when it was needed, and turned off when it wasn’t. Power plants had a well-defined amount of generation capacity, and a well-understood amount of time it took them to ramp up or down, making it relatively straightforward (if not exactly simple) to meet demand for electricity—turn on enough power plants to make supply match demand. Even variable sources of electricity like hydroelectric power were predictable in the short term, and able to ramp up and down as needed.”

A few more links I enjoyed:

Peter Borish on Lessons From the 1987 Market Crash – via Bloomberg
“Bloomberg Radio host Barry Ritholtz speaks with Peter Borish, who is chairman and chief executive officer of Computer Trading Corporation, an investment and advisory firm whose largest consulting client is the Canadian Imperial Bank of Commerce (CIBC). Borish was previously founding partner and right-hand man to Paul Tudor Jones at Tudor Investment Corporation, where he was director of research for 10 years. Borish also previously served as chief strategist for Quad Group LLC.”
Meta’s Achilles Heel(s) – via MBI Deep Dives
“But it is Meta’s rise that must be so damn annoying to Tim Cook (and most likely would be to Steve Jobs too if he were alive) since Apple receives peanuts from Meta. Given Apple doesn’t take a cut of advertising from developers, there’s no direct payment flowing from Meta to Apple, but some may argue rise of social media is what made smartphones much more intriguing to own and hence, Apple and Meta too have symbiotic relationship. I am quite confident that Apple feels they catalyzed smartphone revolution, hosts the wealthiest billion on their platform, and hence deserves some share of Meta’s economics.”

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